The initial $15 million appropriation for MVS in 2000
makes it difficult to determine the school’s operating costs in its first few
years, since the operations were subsidized by initial appropriation. However,
it is clear that MVS has gradually reduced its reliance on the appropriation,
suggesting that the school has begun to create economies of scale.

The largest portion of MVS’ start-up costs was course
and content licensing fees, which consumed more than $4.4 million — a total of
almost 43 percent of MVS’ budget — in its first two years of operation.
Additionally, MVS spent a combined $1.2 million on professional development,
product development and website development during that period. MVS spent more
than $10.3 million in total in fiscal years 2001 and 2002.[*]

These expenditures, however, decreased over time. The
total two-year cost of product development declined by 78 percent between fiscal
years 2001-2002 and fiscal years 2004-2005.[40]
During the same period, the total two-year cost of fees for course and content
licensing fell by 63 percent.[41]
Website development costs nearly vanished.[42]

As noted above, MVS’ charges per semester range between
$89 for Internet-based courses and $449 for remote teacher online Advanced
Placement courses. These fees are partially subsidized by state appropriations.
Altogether, including state subsidies, MVS says that the average operating cost
per semester-long course in 2008-2009 was about $390.43 Based on this figure, a full year of six
courses per semester would cost taxpayers $4,680 per pupil. This annual
estimate represents meaningful educational costs — not just those for elective
courses like digital photography — since MVS offers nearly every course that
high school students must take in order to graduate.[†]
For the 2009-2010 school year, Michigan’s minimum foundation allowance — the
minimum amount of per-pupil money that a Michigan school district could receive through the state — was $7,162,44 53 percent more than what an estimated
full course load would cost at MVS.

[*] “Report to the Michigan Department
of Education on the Development and Growth of the Michigan Virtual High School,
1999-2005” (Michigan Virtual University, 2005), 6,
goo.gl/mibZT. In MVS’ first two years, it completely subsidized the cost of its
online courses for K-12 schools. Ibid., 5.